The SIZE and SPEED of Tuesday's sudden jump in the gold price were thanks to "short covering" according to analysts and traders, with bearish bets suddenly being closed on the futures market.
"Look out for rapid short-covering in gold if we see a move through the rather crowded $1585 level," one New York dealer had earlier commented.
"Short covering I am told," said another after the move, citing comments from Germany's central-bank chief about the Eurozone crisis as the initial cause of the rise.
"Stops triggered through 1580," he added, referring to orders already placed either to "stop losses" by closing a bearish bet at that level, or to open a new bullish position if the price rose above.
Several other chart-watching analysts, including Andrey Kryuchenkov at VTB Capital in London, had recently pointed to $1585 as a ceiling of "resistance" for the gold price.
But "the benefit of being short gold has decreased substantially in recent days," says Standard Bank's commodity team, repeating its own analysis of what it calls "the Big Shorts" in gold.
Betting against gold – also known as "selling gold short" – reached a 14-year high near all-time records last month amongst speculative traders in the futures market.
Pointing to continued quantitative easing and sub-zero real interest rates worldwide, "We pin our fair value at $1760 for gold," Standard Bank's analysis concludes.